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Looking for a cheaper mortgage? Get the true cost first!

There is a great deal of talk about people looking to re-mortgage at present. This is because there are still many hundreds of thousands of people on lenders’ standard
variable rates which increase in line with interest rates. After five rises in the base rate in the past 12 months, a lot of people are feeling the pinch.
There are also thought to be in excess of one million people on fixed-rate deals which will end this year. They could easily see their monthly payments double following the rise in interest rates to 5.75% on 5 July 2007. So there are very good reasons why people will be looking for a cheaper mortgage by re-mortgaging.

Re-mortgaging is not a difficult process but it is important to ensure that you understand the mortgage that you are going to move to. The best deal may not be the one with the lowest interest rate – you need to look at the fees that are charged when you take out the mortgage (start up fees) and at fees that might be charged if you wish to move to another lender at some point in the future (exit fees). The important point is what the total cost will be over the period of the mortgage deal that you want – this is the true cost of the mortgage.

When considering re-mortgaging it is also important to look at as many lenders as possible. Sometimes the best deal is available from a lender that you may not have heard of. Small building societies often have very good deals. A mortgage comparison site that looks at the whole of the market is a good way to do this.

Finally, look out for lenders that have a good reputation for service. Having found what looks to be the best mortgage the last thing you want is to have difficulty getting the funds from the lender.

Re-mortgaging is not like moving house - many people say that moving house is one of the most stressful times of your life. Re-mortgaging can actually be a straight-forward process. If you know the type of deal that you want and you get your information from the right place, it should be stress free.

So, here’s what to do when looking to remortgage:

Don’t just follow the headline interest rate
Check-out the true cost of the mortgage over the deal period using a mortgage calculator
Look at start-up fees and exit fees
Make sure that you are comparing all lenders
Check out the lenders quality of service